7.7 Consider the following data for a clinical laboratory: Activity Data Annual

Question

7.7 Consider the following data for a clinical laboratory: Activity Data Annual Costs Test A Test B Test C Test ID 2,000 1,500 1,000 500 5 5 10 10 1 5 10 20 4 3 3 3 3 Cost Driver Activity Receive specimen 10,000 Number of tests Set up equipment 25,000 Number of minutes per test Run test Record results Transmit results 5,000 Number of minutes per test Total costs $150,000 100,000 10,000 Number of minutes per test Number of minutes per test a. Using ABC techniques, determine the allocation rate for each b. Now, using this allocation rate, estimate the total cost of c. Verify that the total annual costs aggregated from individual test activity performing each test. costs equal the total annual costs of the laboratory given in the table above

Explanation / Answer

7.7) a. Allocation rate of each activity: Activity total Annual Costs Total Driver Allocation rate Receove specimen 10000 5000 2 Set up equipment 25000 30 833 Run test 100000 36 2778 Record results 10000 10 1000 Transmit results 5000 12 417 b & c. Activity Allocation rate Test A Test B Test C Test D Total of Lab costs Receove specimen 2 4000 3000 2000 1000 10000 Set up equipment 833 4167 4167 8333 8333 25000 Run test 2778 2778 13889 27778 55556 100000 Record results 1000 2000 2000 2000 4000 10000 Transmit results 417 1250 3750 11250 33750 50000 Individual costs total 14194 26806 51361 102639 195000

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